Choosing the Right Time to Start Social Security Benefits

For residents of Royal Oak, MI, the best age to claim Social Security is usually the age that fits the household’s health, income needs, tax situation, work plans, and family circumstances. There is no single claiming age that produces the best result for everyone.

Social Security can generally begin at age 62, but starting before full retirement age permanently reduces the monthly retirement benefit. Waiting until full retirement age provides the full scheduled benefit, while delaying beyond full retirement age can increase the monthly amount until age 70.

Should most people claim at 62?

Claiming at 62 may make sense when income is needed immediately, health concerns suggest a shorter retirement horizon, or other retirement resources are limited. However, the tradeoff is a smaller monthly benefit for life.

For someone whose full retirement age is 67, claiming at 62 can reduce the retirement benefit by about 30%. That reduction generally continues even after reaching full retirement age. The exact reduction depends on the worker’s full retirement age and the month benefits begin.

Early claiming may be reasonable when:

• A person cannot continue working and has limited savings.
• Health conditions or family longevity suggest that waiting may not provide enough practical benefit.
• The individual wants to preserve investment assets for other purposes.
• A spouse has a stronger benefit and the household’s survivor strategy does not depend heavily on the lower earner’s record.

Claiming early should not be viewed as simply collecting money sooner. It is an exchange: more years of payments may mean a smaller payment each month.

What is full retirement age?

Full retirement age is the point at which a person becomes eligible for the unreduced retirement benefit calculated from their earnings record. It is based on birth year, not the age a person chooses to stop working.

For people born from 1943 through 1954, full retirement age is 66. It gradually increases for later birth years. For people born in 1960 or later, full retirement age is 67.

A person can retire from work before full retirement age without claiming Social Security. Likewise, someone can continue working after beginning benefits. Stopping work and claiming benefits are separate decisions.

Is waiting until 70 usually better?

Waiting until age 70 produces the largest monthly retirement benefit available under current Social Security rules. For people whose full retirement age is 67, delaying from 67 to 70 can increase the retirement benefit by approximately 24%, through delayed retirement credits.

There is no additional increase for waiting beyond age 70.

A larger monthly benefit can be especially valuable because it is designed to continue for life and receives annual cost-of-living adjustments. Delaying may also improve the survivor benefit available to a surviving spouse, depending on the household’s circumstances.

Waiting is often worth considering when:

• A person is in reasonably good health and expects a long retirement.
• Other income sources can cover expenses for several years.
• The individual is the higher earner in a couple.
• Protecting a surviving spouse from a reduced benefit is a priority.
• The household wants to reduce reliance on investments later in retirement.

The decision is not only about reaching a “break-even age.” It also concerns the value of guaranteed income during the later years of retirement, when medical costs, home maintenance, transportation needs, and other expenses may rise.

How does working affect the decision?

Social Security benefits are based partly on a worker’s highest 35 years of indexed earnings. If a person has fewer than 35 years of covered earnings, years with no earnings may be included in the calculation. Continuing to work can replace lower-earning years with higher-earning years and increase the eventual benefit.

Working while receiving benefits before full retirement age can also trigger the Social Security earnings test. If earnings exceed the annual limit, some benefits may be temporarily withheld. The withheld amount is not necessarily lost permanently; Social Security generally recalculates the benefit after full retirement age to account for months in which payments were withheld.

After reaching full retirement age, a person can work and receive retirement benefits without the earnings test reducing monthly payments.

For local households balancing part-time work, seasonal employment, or a gradual transition into retirement, the timing of both the work reduction and the benefit application matters.

How should married couples approach claiming?

Married couples should evaluate their claiming decisions together rather than treating each benefit as a separate choice. The higher earner’s claiming age can have a significant effect on the surviving spouse’s future income.

A spouse may qualify for a benefit based on their own work record, a spousal benefit, or a combination of benefits. Spousal benefits generally cannot be claimed until the worker has filed for retirement benefits, although individual circumstances can vary.

Survivor benefits follow different rules. A surviving spouse who claims at full retirement age or later may generally receive up to 100% of the deceased worker’s basic benefit amount. If the higher earner claimed early, the survivor benefit may be based on the reduced amount.

For that reason, delaying the higher earner’s benefit can sometimes provide valuable protection for the surviving spouse, particularly when one spouse has a much smaller earnings record or expects to live longer.

Could taxes affect the best claiming age?

Social Security benefits may be partly taxable depending on total income. Wages, pensions, withdrawals from retirement accounts, interest, dividends, and tax-exempt interest can all affect the calculation.
For federal tax purposes, the taxable portion is based on a measure that includes one-half of Social Security benefits plus other income. Some beneficiaries pay tax on part of their benefits, while others do not.
Claiming Social Security while taking large withdrawals from traditional retirement accounts may create a different tax result than drawing down some retirement funds first and delaying benefits. This does not automatically make one strategy better, but it is a reason to compare after-tax income rather than only looking at the gross monthly benefit.
Residents planning around property costs, winter heating bills, housing repairs, and other recurring expenses may find that a tax-aware withdrawal strategy changes the practical value of claiming earlier or later.

What health and longevity factors matter?

Health is one of the most personal parts of the decision. A person with a serious condition may reasonably prioritize income sooner. Someone in good health with a family history of long life may place greater value on a larger benefit later.
Longevity is uncertain, so no calculation can predict the right answer perfectly. It can help to compare estimated lifetime income at different claiming ages while also considering inflation, taxes, investment risk, and the possibility of needing dependable income in the 80s or 90s.
Social Security retirement benefits are also different from disability benefits. Someone unable to work because of a qualifying medical condition may need to examine disability eligibility rather than simply claiming reduced retirement benefits at 62.

A practical way to compare claiming ages

Before filing, compare at least three scenarios: claiming at 62, claiming at full retirement age, and delaying until 70 if financially possible.
Review:

• The estimated monthly benefit at each age.
• Expected household income and expenses.
• Health status and family longevity.
• The higher earner’s potential survivor benefit.
• Employment income and the earnings test.
• Pension, investment, and retirement-account withdrawals.
• Federal income-tax effects.
• Medicare enrollment timing and premium considerations.
• Whether the household needs income now or wants larger guaranteed income later.

The best age is the one that supports the entire retirement plan, not simply the age that produces the first available payment. For many people, claiming between 62 and full retirement age is appropriate. Others benefit from waiting, particularly when they are healthy, have sufficient temporary income, or are protecting a spouse’s future financial security.